07.27.2012 21

Tying Obamacare in knots

ObamaCareBy Bill Wilson — A July 18 report by the Cato Institute’s Michael Cannon has revealed a critical flaw in the Obamacare law that could ultimately prove to be its undoing. Namely, if states refuse to set up an insurance exchange under the law, the federal government lacks authorization to dispense some $800 billion in subsidies through a federally operated exchange.

This is important because, coupled with states’ option to implement the Medicaid expansion or not, it appears the key player in defunding Obamacare going forward will be the states. The Supreme Court ruling on Obamacare found that the law’s mandatory Medicaid expansion was unconstitutional, effectively giving states an opt-out provision that many now plan to take.

In short, if states refuse to expand Medicaid, and there is no funding for the insurance exchanges, Obamacare will effectively be defunded.

To deal with this flaw, the Internal Revenue Service (IRS) on May 24 simply issued a regulation effectively rewriting the law that would allow the federal government to fund the exchanges. Per Cannon, “With the stroke of [a] pen, the IRS (1) stripped states of the power Congress gave them to shield employers from that $2,000 per-worker tax, (2) imposed that illegal tax on employers whom Congress exempted, and (3) issued up to $800 billion of tax credits and direct subsidies to private health insurance companies — without any congressional authorization whatsoever.”

Such an arbitrary move on the Obama Administration’s part is hardly surprising. It comes atop a litany of usurpations including making recess appointments when Congress was not in a recess, forcing religious-affiliated institutions to fund contraceptives in violation of their teachings, and allowing for mortgage refinancing up to 125 percent of loan-to-value when the law placing Fannie Mae and Freddie Mac into conservatorship never allowed it.

But that does not mean the House of Representatives, under the leadership of Speaker John Boehner, has to stand by idly while the Obama Administration rewrites the law at will.

The government will run out of money come Sep. 30. Congress must pass a continuing resolution funding the government as of Oct. 1. In that resolution come up, the House should attach a budget rider that states the IRS cannot implement its regulation funding the federally operated insurance exchanges because it is contrary to congressional intent.

This is by far the most effective thing that Congress can do to help defund Obamacare this year. States already possess the option to opt out of Medicaid expansion. Giving them the power to gut the insurance exchanges as well could be the tipping point that kills the law.

Such a measure might not pass the Senate or be signed into law by Obama, but it sets the stage for what is to come. It also makes Mitt Romney’s position on funding for federally operated exchanges a critical issue on the campaign trail. Should he be elected, his administration could undo the IRS regulation via the regulatory process or executive order.

Immediate action by the House could help reaffirm the states’ power to defund Obamacare almost in full. Per Cato’s Cannon, “If enough states refuse to establish an Exchange, they can effectively force Congress to repeal much or all of the law.” All of which depends on Speaker Boehner’s willingness to make Romney’s job as easy as possible in 2013.

Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.

  • Jill

    Lets all pack up the democrats and send them to China where they won’t have to work so hard at stealing the rights of the people.

  • Michael Cannon is one of my favorite analysts, but he’s grasping at straws here. In the absence of outright repeal, nothing will stop the State from imposing its will on the American public. There is far too much at stake for them to stop now. They see that if they can manage to nationalize health care, they’ve got us all by the short and curlys.

  • Fed up with the Fed

    I’ve been saying it over and over… compliance will make or break this monster.  Think of it as Amendment 2.0 – the right to bear arms (in order to thwart an unruly government), except this time it’s just the right to refuse to “obey” elected officials wishes.  Who do they think they are, anyway?!

  • Does any TRUE AMERICAN think Obama will be around to create many more problems??????
    I think one way or the other this WHOLE REGIME WILL DISAPEAR .Then we will just roll up our sleeves and get things changed back to what changes  they have made when they thought they would be turning AMERICA into a Socialist Nation.

    Research every one that Barack and Soros the PUPPTER has put in office sense he was elected. You JUST MIGHT BE SHOCKED. I WASN”T.Of course SOROS Not only UGLY ON THE OUT SIDE BUY ALSO INSIDE,DEATH WILL BECOME HIM.
    ALL THEIR HARD WORK GOING UP IN SMOKE.SUCH IDIOTS.Your house of cards are falling

    And we will remember all the Republicans and Dems  that were setting back with their hands in their pockets and send them on their merry way also.
    WE HAVE  HAD IT!!!!!!!!!!!!!

  • Maybe you will set back and believe that ,BUT we will NOT SET DOWN AND ALLOW THEM TO DO ANYTHING TO CHANGE OUR CONSTITUTION.
    You think because they say things that go against AMERICA and we set back and LET THEM???????
    THANK GOD everybody will NOT lay down and let them run our country into Socialism.LiKE you are thinking.
    The OBAMA”S Will BE LEAVING THE WHITE AND TAKE HIS WHOLE REGIME AND CHICAGO THUGS WITH HIM, They will be asking SOROS how it feels to be KICKED OUT A COUNTRY? He will have the answer ,he has been through OUT a couple of times.
    Other countries found him to be a SHi– disturber and threw him out on his ear, so he knows.

  • MidnightDStroyer

     The Dems in china would still have a hard time…Simply trying to FIND Rights that the government hasn’t already taken.

  • MidnightDStroyer

    Actually, it’s more like the Right of Nullification. This Right is founded in the 10th Amendment, in that any power not specifically granted to the Feds (nor specifically denied to the States) is up to the States & the People.

    The Right of Nullification already has racked up a proud history in America…You’d be surprised on how much federally-implemented actions have been wiped away, simply because of federal over-reach.


    Does the IRS have precedence over the Supreme Court?
    I do not think so and do not understand how the IRS can change a law?
    On whose authority?
    The Congress must do something to arrest these perpetrators.  If only they would move theor butts and REALLY DO SOMETHING this would long ago have disappeared, except for the Imposter!

  • Politicstick

    Nevermind all of this!!! As soon as The Supreme Court allowed the mandate only as a tax, it cut Obama care off at the knees. As per our Constitution, any and all “tax” legislation MUST originate in the House Of Representatives. This legislation, the ACA, originated in the Senate and is now categorized as a “TAX” law, (enforced by the IRS) it is NULL AND VOID!!!!


  • the states can kill it by opting out of subsidizing it’s medicaid portion.

  • 28 are out and more will join

  • vote out the potus and Senate and begin tearing the tax bill apart all will be well in 2012

  • Jrbennett2006

    we need to get rid of Obma & Obma care.

  • bigdog137

    This debacle needs to be defunded, somehow, so it just goes away!  72% of the voting public does not want this mess!

  • Msg2426

    ALL your comments are childish.  I understood by reading the comments  that: if someone is not a republican, no doubt he is a communist, socialist, anarchist or a nazi and against american freedom. 
    Universel health care is adopted by all civilyzed countries;  Finland, Danmark, Belgium, Germany, England etc.. BUT Not in Africa!!!!  
    Please, educate yourselve, no violence, a better world, a better place, helping each other, have compassion BE HAPPY.
    The president was elected by Americans He deserves the respect and acceptance of all of us.
    To get cheaper labor manufactures send the jobs in India, Philipines, Mexico. The big companies and their executves pocket more money. Place that money in countries where taxes are less pay and don’tpay in USA.  The rich don’t care about us unless we perform cheap labor for them.
    I just don’t understand why????? This din’t happen in the 3  years with President Obama. THe wars started before President Obama, and the economy and deficit were already a desaster before President Obama.
     Three years to fix 8 is noe enoegh.
    So think your violence and absud little ignorance. Good luck for your children

  •  Stop and “think again”- – the plunging economy “started” in Jan. 2007 when the “dimwits” overwhelmed both houses of Congress!  The “big fiscal surplus” slick willy created, in the 90’s was created by desecrating our entire military complex by 2/3rds- -so we were “sitting duck” on 9/11.  The Bush administration had to start rebuilding our military strength, immediately- -it took that “artificial surplus” and a lot more to get US ready to “take the battle to the enemy”!  But, things went quite well “until” Jan. 2007! So, the 3 1/2 years obama-soetoro has spent, tearing US down some more, has really been 5 1/2 years of “steady decline”- -NO attempt at correction, just his blatant attempt to multiply it. 
    So, DON’T “preach to US” about “ignorance” until you do YOUR OWN HOMEWORK and, this time, at least “try” to come up with a “correct answer”!

  • evermyrtle

    So far, nothing has touched his self given power, yet and I seriously doubt this will make a dent, in his endeavor to bring us down,as a
    Christian nation. 

  • evermyrtle

     I think, send them to Iran or to Kenya.

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